Bond Yields Set To Plunge In 2015: Next Year Global Treasury Supply Will Tumble By 20% As ECB Joins The PartySubmitted by Tyler Durden on 12/20/2014 16:15 -0500
According to Goldman's own calculations, the demand squeeze for the High Quality Collateral that is global "Developed Market" Treasurys is about to go through the roof mostly thanks to central banks which will - even in the Fed's temporary hiatus from the monetization scene - soak up an unprecedented amount of Treasury collateral from both the primary issuance and secondary private market in their scramble to push global equity prices to unseen bubble levels and achieve the kind of Keynes-vindicating, demand-pull inflation that Russia was delighted to enjoy in the past several weeks.
How much? The answer: a lot, as in a whopping 20% collapse in supply, once the ECB joins the fray!
Every year, David Collum writes a detailed "Year in Review" synopsis full of keen perspective and plenty of wit. This year's is no exception. "I have not seen a year in which so many risks - some truly existential - piled up so quickly. Each risk has its own, often unknown, probability of morphing into a destructive force. It feels like we’re in the final throes of a geopolitical Game of Tetris as financial and political authorities race to place the pieces correctly. But the acceleration is palpable. The proximate trigger for pain and ultimately a collapse can be small, as anyone who’s ever stepped barefoot on a Lego knows..."
"Most investors go about their job trying to identify ‘winners’. But more often than not, investing is about avoiding losers. Like successful gamblers at the racing track, an investor’s starting point should be to eliminate the assets that do not stand a chance, and then spread the rest of one’s capital amongst the remainder." So as the year draws to a close, it may be helpful if we recap the main questions confronting investors and the themes we strongly believe in, region by region.
While no one will be entirely surprised in today's consequence-less world, the "bombshell" news that Greek Independent MP Pavlos Haikalis claims he was offered EUR 2-3 million in order to vote for Greece's next President is no less shocking in its exposure. As AP reports, it is the second such claim from the Independent Greeks. Another of the party's lawmakers claimed last month that someone had approached her with the intention of bribing her. The government immediately jumped into defense mode and dismissed the claims as "badly acted theater" and called for any evidence to be made public. However, as KeepTalkingGreece reports, "sources" from the prosecutor’s office told media that Haikalis did indeed submitfootage, and according to latest information, told the briber’s name to the Greek Police. This can only bring Goldman's worst-case scenario - a Cyprus-style collapse - even closer for Greece.
The ruble is dying, and fast. Ill prepared to wait it out, the central bank is clearly a step behind the game and perhaps even out of its league. But Black Monday suggested other powers might be at play.
Monday was incidentally the day of an interesting 700 billion ruble liquidity auction. Prior to the auction, Rosneft raised 625 billion rubles (almost $11 billion) in a bond issue backed by the central bank...
The oil price drop is a big problem - not just for Russia, or for the other over-levered emerging market currencies that stand to be traumatized by a rising dollar, but ultimately even for the US itself
Shifting consumption from gasoline sales to retail sales does not create economic growth. It is just a "shift" in where the same dollars are spent. However, there has been much "hoopla" over the recent retail sales report for November that saw retail sales jump for the month by 0.7%. While on the surface this appears to be a strong retail sales report, a quick look below the surface quickly destroys that claim.
We are far too speechless to even comment on the latest Goldman "leading indicator" swirlogram, which we can only assume was made public after another unprecedented "North Korean hack" at US "recovery" propaganda central, so here is Goldman's own take:
The drop in oil prices is certain to cause some incremental unemployment in the U.S. energy industry; the question is simply how much and what that means for the American economy as a whole.
Putting it in a bigger picture context, CAT's global sales have now declined for a record 24 consecutive months, thanks to the "Great Recovery." By comparison the number of months of consecutive declines during the great financial crisis? 19, which means that for CAT, the Great Recovery is now 25% worse than the Great Recession. And counting.
Having started at noon Moscow time (4am Eastern), Putin's annual Q&A run for a massive three and a half hours, during which the Russian leader took numerous questions from the public and as expected, reiterated the key "rally around the flag" talking points that have permeated Russian rhetoric over the past few weeks as the economic situation in Russia deteriorated. As Bloomberg notes, the conference was attended by hundreds of reporters and carried live on television around the world, the event took on heightened importance this year as the president sought to reassure a Russian public unnerved by the ruble’s plummet. While he did acknowledge the difficult economic reality, Putin sought to reassure his countrymen that the current weakness "would last no longer than two years." Putin promptly pivoted against the west and accused the U.S. and European Union of trying to undermine his country and blaming external factors for the sharp plunge in the ruble, notably the drop in oil saying that “the economy will naturally adapt to the new conditions of low oil prices.”
After drifting unchanged for much of the overnight session, US futures exploded higher shortly after the previously noted SNB's NIRP announcement, which took place at 2 am eastern, which made it explicit that yet another banks will herd the bouncing dead cats right into new all time stock market highs, and following the European open, were carried even higher as the global "risk-on" momentum ignition algos woke up, spiking all recently depressed assets higher, including energy as Brent rose almost 3% despite Saudi Arabia’s oil minister Ali al-Naimi once again saying "it is difficult if not impossible" for OPEC and his kingdom to reduce output.
Crude Continues Slide, Ruble Stabilizes, US Futures Rebound As Global Stocks Slump: All Eyes On YellenSubmitted by Tyler Durden on 12/17/2014 06:50 -0500
Previewing today's market: near record low liquidity, with chance of ridiculous volatility in the Ruble, energy and equity markets. While no doubt today's main event will be the "considerable" FOMC announcement and the Fed's downward-revised economic projections followed by Yellen's press conference, what traders will be most excited by is that, finally, Jim Bullard will no longer be bound by the blackout period surround FOMC decisions, and as such can hint of QE4 again at his leisure during key market inflection (i.e., selling) points.
The rank economic cheerleading in the guise of “news” printed by the Wall Street Journal, Reuters and the rest of the financial press never ceases to amaze. But on the heels of Congress’ pathetic capitulation to Wall Street over the weekend you have to wonder if even the robo-writers who compose the headlines are on the take. How could anyone in the right mind label this weekend’s CRomnibus abomination “A Rare Bipartisan Success for Congress”? Apparently, that unaccountable plaudit was bestowed upon Washington by the WSJ solely because it avoided another government shutdown.
Pretend, for a minute, that you’re a money manager in today’s manipulated world...